Single Touch Payroll Phase 2 Advisory Group key messages 26 September 2022

Welcome and introductions

The chair opened the meeting and welcomed members.

No conflict of interests declared.

Digital service provider readiness and assurance

The ATO tabled a paper on Digital Service Provider (DSP) readiness and assurance noting.

As of 31 August 2022:

• 215 DSP products, 67% of products expected to build for Single Touch Payroll (STP) Phase 2, have been whitelisted for STP Phase 2. Not all these products have transitioned all their customers.
• 191 of these products have customers/employers that have commenced STP Phase 2 reporting.
• 6 DSP products were whitelisted for STP Phase 2 in August 2022. The ATO expect most products to be ready by the end of the calendar year.
• 64 products have commenced extended conformance testing, does not include those already whitelisted.

In the testing phase, there has been no loss in momentum from DSPs with many products at advanced stages of testing. There are some DSPs, particularly from smaller business developers, that have required extra support in understanding and building for the requirements to be conformant.

Some larger DSPs have also requested deferrals for more time, including to support their customer transition.

We are continuing to work with DSPs through our go-live support on transition issues and other issues identified. To share knowledge across the DSP industry we continue to update our educational suite of products.

DSP deferrals

We are maintaining communications with DSPs on due dates, including monitoring when DSP deferral dates are nearing expiry and continue to follow up if a DSP product is identified as not on track and if urgent action is required.

Employer transition, engagement, and communications

ATO tabled a paper on employer transition engagement and communication noting:

• As of 26 September 2022, over 230,000 employers are reporting STP Phase 2 data for over 4 million individuals.
• ATO have had some big employers come on board.

The last 6 weeks we have focussed on:

• Promoting the reporting help material to address some mistakes we’re seeing in employers’ STP Phase 2 reporting.
• August correspondence campaign – The letters were based on product readiness and sent to employers. The messaging either encouraged employers to start preparing, or if their product was ready, to start reporting.

A similar correspondence campaign is planned for late October 2022.

Over the next few months, we will continue to write to employers as their deferrals are due to expire. We are also focussing on the tax agent client list which will be issued in October.

There are several speaking engagement events in October, where the ATO is supporting payroll and bookkeeping associations to help prepare their members for the changes. These will focus on pay codes setup and tips and hints to avoid when transitioning.

Update on progress with mapping of allowance codes

The Fair Work Commission (FWC) are working on a project where their database of awards, rates and conditions called modern award pay database will be available through an Application Programming Interface (API) for software developers to incorporate into their products. The ATO is working with FWC on inclusion of STP Phase 2 allowance codes in the database.

Details of the API release are being worked through by FWC.

The FWC are working through and mapping each allowance category in their awards database to an STP2 category. The FWC are leading this with the support of the ATO and 16 of 150 awards have been reviewed so far.

ATO are also working with FWC on the governance arrangements for the ongoing maintenance of this information to ensure any new allowances that come up in awards or changes to rates and thresholds are managed.

Consultative group update

The Employer Transition Working Group met in late August.

There were some good insights from the group. There are still some employers waiting for their products to be ready.

Industry scan

Members insights on what’s new and different in their environments:

• Seeing several software service ID issues occurring where the connection of software to the ATO fails. The client is still on the agents list, but the agent lodged reports are not getting through to the ATO. Members are spending significate time on phone to the ATO and then get directed down the wrong pathway to fix the software connection issue.
• The ATO is looking at all the standard business reporting error codes coming through to see what messaging or support can be provided as well as providing industry updates.
• There are concerns around the parameters of STP declarations by an employer.
• There is still some confusion around closely held payees (CHP) and the CHP flag attached to an employee. ATO guidance and around CHP is not clear, particularly in the STP world. ATO content needs to be clearer for agents or employers doing it for the first time.
• The STP journey - Is it time to start communicating stories on how STP Phase 2 is making a difference. It was suggested to provide some examples of how it’s working in Service Australia from a client experience. Members suggested the ATO to invite Services Australia to the next Single Touch Payroll Phase 2 Advisory Group meeting and share some insights on how they are using the STP data.
• Seeing a small increase in calls to the superannuation funds where members are having issues with their Centrelink benefits and are asking funds what changes have been made in reporting to Centrelink.
• Seeing new start-ups in the media who are entering the payroll space, where they are designing systems to assist small business which don’t require much input from accountants and bookkeepers. Some small business may leave their supplier and will need to migrate into someone else’s software.
• The ATO is seeing an active industry and expansion of products and new entrants into the market. We are keeping track of this and maintaining our requirement in terms of conformance testing.
• There are concerns around the implications of the Optus cyber security breach. One DSP provider is starting to see enquires from customers and employers seeking confirmation about the security of data inside their payroll software and systems.
• DSPs are starting to look at their understanding of Withholding Payer Number (WPN) holders, as they will need to start reporting in STP by 1 July 2023.
• The ATO is looking at what to do with WPN holders. Information will be available before the 30 June.

Other business

Members highlighted the extraordinary work and dedication of the ATO team to support the STP program including supporting the 300 DSP going through the conformance testing.